Comm Bank faces class action over money laundering scandal

COMMONWEALTH Bank is facing the country's largest ever shareholder class action over a share price rout in the wake of explosive money laundering allegations.

The nation's largest bank was earlier this month accused of more than 53,000 breaches of anti-money laundering and counter-terrorism financing laws by the Australian Transaction Reports and Analysis Centre.

The breaches, which the bank has blamed on a single IT error, related to tens of thousands of dollars in cash deposited in CommBank ATMs by money laundering syndicates and sent overseas.

Law firm Maurice Blackburn has teamed up with litigation funder IMF Bentham to pursue CommBank in a potential class action on behalf of its 800,000 shareholders, who suffered a share price drop of about 5 per cent after the allegations were made public.

Maurice Blackburn alleges the bank breached its continuous disclosure obligations by failing to inform the market when the issues first came to light in 2015.

"Our investigations and analysis show that this drop was in the top one per cent of price movements that CBA experienced in the past five years, making it apparent that the news was of material significance to shareholders," Maurice Blackburn national head of class actions Andrew Watson said in a statement on Wednesday.

"The AUSTRAC allegations are extensive and it is astounding that the market would not be advised of such serious and repeated breaches as soon as the company became aware of them. Instead the CBA has said that its Board was aware of the breaches in the second half of 2015 but chose to say nothing to the ASX until 4 August 2017.

"As the largest company on the ASX shareholders would expect the CBA to take a leadership role in setting high standards of corporate conduct. The AUSTRAC allegations, if proven, show an abject failure of corporate governance and risk management.

"The failure to make proper disclosure to the market regarding those failures adds insult to injury for shareholders."

IMF Bentham director Hugh McLernon said work was being finalised on the Federal Court pleading to commence the class action.

"CBA is facing most serious allegations from AUSTRAC, and there are serious questions to be answered about what the company knew and when," Mr McLernon said.

The scandal prompted the announcement that chief executive Ian Narev would retire in 2018, and the bank stripped all executive bonuses to demonstrate "collective accountability".

CommBank earlier this month posted a record profit of $9.9 billion, its eighth record result in a row.